ESM3131 - Conditions of Liability – liability for NICs – client in European Economic Area
Council Regulation (EEC) 1408/71: Article 13.2(a), 14.1(a)(b) and 14.2(b)
Where the worker provides his services to a client abroad, the
intermediaries legislation may not apply for NICs purposes (see
ESM3130). However, where the duties are
to be performed abroad with an overseas client there are exceptions
to this general rule, depending on where the client is based.
Any person employed in the territory of one Member State of
the Economic European Area (EEA) is subject to the legislation of
that state even if he resides in the territory of another state or
the registered office or place of business is situated in the
territory of another state.
EEC 1408/71: Article 13.2(a)
Example
A contract involving a worker living in the United Kingdom
and a French client, under which he works in France would mean he
would be liable to pay French social security contributions. He
would not be an employed earner for the purposes of United Kingdom
national insurance legislation. Therefore the intermediaries
legislation will not apply.
EEC 1408/71; Article 14.1(a)
There is an exception to Article 13. This Article allows for a
person to continue to pay United Kingdom NICs where they are
working for a United Kingdom employer who posts them overseas to
work in any country in the EEA for not more than 12 months. The
employer obtains form E101 from NICO International Services. Under
certain circumstances the 12 month period may be extended for a
further 12 months and an E102 obtained.
The intermediary can obtain form E101 from NICO
International Services and the worker is classed as a posted
worker. He would be regarded as an employed earner for the purposes
of the United Kingdom national insurance legislation by reason of
the contractual arrangement between the intermediary, the worker
and the client. However, the intermediaries legislation does not
apply, for NICs purposes, because in deciding whether the
legislation applies you consider what the situation would have been
if the intermediary had not been involved.
EEC 1408/71; Article 14.2(b)
A further exception is where a person is employed in two or more
Member States. If so, they are subject to the legislation of the
Member State in which they reside.
Example
A contract between a worker living in the United Kingdom and
a client in France to work in both in the United Kingdom and France
will mean he is still liable to pay UK contributions. He would be
an employed earner for the purposes of United Kingdom national
insurance legislation and the intermediaries legislation may
apply.
